More Insights About Product Managers with Pricing Responsibility

Last week I wrote about the characteristics of product managers who have pricing responsibility as deduced from data from Pragmatic Marketing’s 2015 annual survey. This week let’s dive into the minds of these product people.

As a quick reminder, over 2000 people in product teams filled out our survey. I was specifically interested in the answer to the question “Which of the following business activities are your responsibility? Check all that apply: setting and maintaining pricing”. 757 out of 2087 product people claimed this was one of their responsibilities. This was 36%. 36% is our benchmark as we look for other insights.

The type of product managed is a big indicator of who does pricing. 49% of product people in hardware companies have that responsibility. This is almost certainly due to the fact that hardware companies tend to (incorrectly) use cost plus pricing. Since the product manager manages the cost, he or she also manages the price. Ugh. In the worlds of software, cloud and professional services, the number hovers around the 36% point.

The industry also seemed to be a good indicator. The following industries were well above the average: Agriculture and food services, manufacturing, and construction with 57%, 54% and 41% respectively. It’s reasonable to assume these are related to the fact that their businesses tend to have high variable costs (i.e. not software driven). All other industries seemed to hover slightly above or below 36%. They were more software heavy (e.g. education and financial services).

We asked where do they see themselves in 5 years and surprisingly the largest percentage, 44%, came from people who saw themselves in the same position at the same company. Is this an indicator of job satisfaction? The lowest, 34%, said a different company. This was also the largest number of respondents at 824.

Possibly the most confusing result was about what responsibilities besides setting and maintaining pricing do you do. The lowest correlation with pricing was understanding market problems. WHAT???? How can you price if you don’t know the value of the market problems you’re solving? My only explanation is that people consider pricing an activity to be done after the product is developed and market problems is crucial for creating the right product.

Of course I disagree completely. Product people who understand pricing also understand what our markets value which help us define better products. This seems like a huge opportunity for companies to make more money by defining product and pricing them better.

To summarize, product professionals in hardware companies or industries with high variable costs are more likely to have pricing responsibility. Also, product professionals with pricing responsibility seem to be more satisfied with their jobs and (unfortunately) they seem to be more focused on products after they are defined.